Germany warns Greece over reforms as left rises

Germany’s finance minister warned Greece that any new government must respect commitments made by its predecessor, as the country moved closer to early elections that EU officials fear would be won by a radical leftist party.

Wolfgang Schaeuble spoke after German lawmakers last week backed plans to give troubled Greece a two-month loan extension while international creditors finish an audit to determine the release of its next 7.0 billion euros ($8.7 billion).

“We will continue to help Greece along the path of difficult reforms,” Schaeuble said in an interview with Germany’s Bild newspaper published Saturday.

But if Greece “decides to take another path, that will be more difficult,” the conservative finance minister warned.

Greece moved a step closer on Tuesday to early elections that could undermine its international bailout and rekindle the eurozone crisis, after lawmakers failed for a second time to elect a president.

The government candidate, EU Environment Commissioner Stavros Dimas, fell 32 votes short of the required 200 votes, meaning a third and final vote will be held on December 29.

European Union and International Monetary Fund officials fear an early election would be won by radical leftist party Syriza and could undo many of Greece’s ongoing fiscal reforms.

Syriza, which wants to end a four-year austerity drive and re-negotiate Greece’s bailout, holds a steady lead in opinion polls.

Greece’s dire finances nearly destroyed the euro in 2012, and despite two bailouts worth 240 billion euros and most of the debt held by private investors being wiped out, the economy has only begun to recover after six years of contracting.

The reforms required by the EU and IMF have improved the government’s finances, but have taken a terrible toll on Greeks as unemployment soared above 27 percent and many people have had wages and benefits cut.

Schaeuble said Greece had made “huge progress” in recent years, but issued a sharp warning in the face of the growing challenge Syriza is posing to the Athens government.

“New elections would change nothing with regard to Greek debt. Every new government must respect the agreements made by their predecessors,” he said.

Prime Minister Antonis Samaras warned this week that early general elections, which could be held as soon as January 25, constituted a “national danger” that must be avoided.